ABN AMRO Bank NV will lay off about 1,500 staff and outsource its IT operations worldwide in a series of deals worth €1.8 billion (US$2.2 billion) over five years. IBM Corp. will take the lion's share of that to run the bank's main data centers, develop applications and manage bank employees' desktop, laptop and handheld computers, it said.
"What we tried to realize first and foremost is saving cost," the bank's chief information officer, Lars Gustavsson, told analysts and reporters in a conference call Thursday.
"The second thing is to get better and earlier access to new technology," he said.
The bank also struck application development deals with Accenture Ltd. of Bermuda and three Indian companies -- Infosys Technologies Ltd. of Bangalore, and Tata Consultancy Services Ltd. (TCS) and Patni Computer Systems Ltd., both of Mumbai. Infosys and TCS will also provide application support, the ABN said.
ABN is committed to pay IBM €1.5 billion, TCS €200 million and Infosys €100 million over the five-year life of the deal, according to company spokesman Sierk Nawijn. The bank has not yet committed to application development spending, he said.
The deals form part of ABN's Group Shared Services program, announced last year. The bank expects the IT element of this program will save it at least €258 million a year from 2007.
Some of those savings will come from payroll reductions: ABN will retain 1,800 full-time IT staff, transfer 2,000 to the five IT vendors and lay off around 1,500 others over the next 18 months, it said.
A majority of the transferred staff will move to IBM, ABN said. The bank is consulting employee representatives around the world about the outsourcing deals, and must obtain regulatory approval before the transfers can go ahead, it said.
Under the latest deal, ABN will retain control of some IT functions, Gustavsson said.
"We are still keeping 1,800 people and these people will predominantly be employed working with vendors, writing specifications and testing solutions," he said, adding that in addition to vendor management, the company would also retain control of information security and telecoms management.
"The bank will decide technology strategy with the vendors but final responsibility remains with the bank," Gustavsson said. -- IDG News Service
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